In a conventional merchant-consumer transaction, the consumer provides financial account information to the merchant by way of swiping a card, entering the account number, scanning a code comprising the account number, reading the account number to the merchant, or otherwise transmitting the account number to a merchant system. The merchant system's point of sale terminal or online payment processor submits a payment request to the issuer of the account through the corresponding card network. If funds are available, the issuer sends an authorization code to the merchant system to signal approval of the payment transaction.
Near Field Communication (NFC) is a proximity communication technology that can enable contactless device payment technologies and that is supported by the Global System for Mobile Communications (GSM) Association. Radio frequency identification (RFID) is another wireless communication technology that can be adapted to enable NFC smart card payment technology. NFC communication generally is conducted in a range from about 3 to about 4 inches. Such short communication distances enable secure communication between close field proximity enabled devices. In operation of an NFC transaction, a user “taps” a device, such as an NFC-enabled mobile phone or NFC-enable smart card, to a reader. The reader recognizes the NFC-enabled device when the device is moved within range of the reader and establishes a secure communication channel with the device. The short range proximity connection between the devices enables transmission of limited data to facilitate a payment transaction between the reader and the device. The short range proximity connection is limited by a small bandwidth, and thus only allows for the exchange of a limited amount of information between the devices.
A mobile computing device, such as a mobile phone or a tablet, can be used to complete a NFC payment transaction. Unlike a traditional payment card or device, the mobile computing device has a processing capabilities that enable the device to receive additional information concerning the transaction and process decisions based on user choices or pre-defined rules stored in an application, such as a digital wallet application. However, during a traditional NFC payment transaction, only limited transaction-specific data (for example, a purchase price) is transmitted to the mobile computing device in the payment request. The limited nature of the payment request and the small bandwidth of the NFC connection limits the additional processing capabilities of the mobile computing device.
There are two types of financial accounts that can be used in payment transactions. Open loop financial accounts can be used at any merchant location (for example, VISA or MasterCard). Private label financial accounts are limited to use only at specific merchant locations (for example, Merchant X Credit Card). During NFC payment transaction, the communication between the merchant reader and the mobile computing device is limited to information contained in the payment request. Thus, the mobile computing device is unable to determine whether the merchant reader supports private label financial accounts. Accordingly, traditional mobile computing device digital wallet applications only support open loop financial accounts during NFC payment transaction.